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Opinion: Wall Street looks in the mirror ... and sees nothing

MarekFuchs

Columnist

During a week in which the punishment of the New England Patriots for deflating footballs might exceed that of Standard & Poor’s for giving their papal blessing to imploding cigar securities, Wall Street looked deep within its own soul — and ran for the hills.

If that notion sounds perverse, well, welcome to another week on Wall Street.

Before we lay bare the facts of the rogue credit agency’s settlement and Wall Street’s ducking its own image in the mirror, let’s talk fourth-quarter earnings.

We learned this week that ocean liners have turned around faster than IBMIBM, -0.08%
The boys and girls from the mean streets of Armonk have a long way to go. We also learned that Morgan Stanley’s
MS, +0.02%
quest to transform itself into a less risky outfit is fraught with risk. In fact, the prospect of mitigating risk on Wall Street, where derivative cowboys roam free on the range, seems about as likely as catching a moonbeam in a jar. Maybe less. NetflixNFLX, -0.43%
reported quarterly results, which were out to impress, while eBay
EBAY, +0.95%
reported mixed results, and Land’s End
LE, +0.30%
issued a forecast the was pure barfnado.

In wider news, Facebook
FB, +0.50%
pontificated at Davos, managing to claim with precisely zero shame that it had created 4.5 million jobs. This only confirmed the fact that when it comes to tooting its own horn, Facebook has all the delicacy of primal rage. Srsly, as the kids say. It makes you long for the understated approach of Amazon
AMZN, +0.05%

Speaking of unconfirmed, a rumor hit the market mid-week that Google
GOOG, +1.12%
was getting out of the mapping business, making it potentially, but not definitely, safe for me to go back to sunbathing in a Speedo in my backyard. An equally frightening prospect hit the market too: Microsoft
MSFT, +0.80%
decided to compete with mobile by giving away Windows 10. I guess all that experimentation the newspaper industry did to stem the tide of progress by giving away its wares proved inspirational. Microsoft, which used to own the software world, is now imitating the business model of The New York Times
NYT, +0.72%
Play that one forward and try not to shiver.

Now back to Wall Street, which is always so wonderfully smarmy and morally anemic.

But enough pieties!

Regulators let Standard & Poor’s, those shifty little devils, off with a penalty that was, at least in terms of raw numbers, not much. The credit-rating agency was fined $80 million, a drop in the veritable bucket, for inflating credit. Those transgressions, mind you, all took place since the financial crisis. S&P had already promised to never, ever inflate mortgage bubbles again, so you’d figure it had learned its lesson, but Wall Street always has that irritating habit of committing the same sin twice. Regulators, though, did come up with a new twist: They are having S&P take a one-year “time-out” from rating certain commercial mortgages. That’s right: A full-grown ratings agency got the treatment my kids do every third minute at the dinner table. Where monetary fines fail to teach Wall Street boors lessons, perhaps treating the boors likes babies might.

But perhaps that is unfair. After all, a baby is not capable of introspection, but Wall Street is. In fact, big money managers at firms as diverse as J.P. Morgan
JPM, -0.89%
Bank of New York Mellon
BK, -1.05%
and T. Rowe Price
TROW, -0.83%
have plenty of insights into how Wall Street firms trade. No one can hide small fractions in a big trade like Wall Street, as Wall Street well knows.

That’s what we learned this week when a consortium of money managers, led by Fidelity, moved toward conducting all their trading off to the side, in so-called “dark pools.”

Wall Street firms, which normally engage in cartoon-ish rivalries, are banding together and effectively acting under the cover of night? What could possibly go wrong there … besides everything known to mankind?

As Shakespeare said: “Something wicked this way comes.”

We know that dark forces are at play on Wall Street, and that Wall Street is sometimes a dark pit of despair. But when Wall Street has given the nation so many dead-legs that even swaths of Wall Street start operating “without the involvement of Wall Street,” as the media reported it, you know it’s time for only one thing: Someone here needs a time-out.

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